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GBP/JPY Near Short Term Bottom?

Last updated 4/24/2009 6:45 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The GBP/JPY has been in an uptrend for the past few months.  The rally has stalled over the past couple of weeks and we have seen a correction.  The correction has resulted in a bullish Gartley and double bottom beginning to form.  The pattern would complete near the bullish trend line, which adds further convergence to this pattern. 

We are looking to buy the GBP/JPY if it falls to 140.55 (Point D).  Point D is located at the convergence of the following points:

The bullish pattern on the GBP/JPY is fairly straightforward.  The only extra convergence that was not mentioned in our initial paragraph is the previous resistance at the buy entry seen on the Daily Chart.  We will now go over what to watch for assuming the pair continues falling toward our entry at 140.55.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to drop slowly and enter the trade near our hypothetical entry on the 30min Chart.  If there are long bars near the completion of the CD leg, we will not take the trade.  So far the pair is showing good time symmetry, so long bars are unlikely at this point.  Also, if the pair comes within 20 pips of reaching our entry, does not enter, and reaches T1 before entering, the trade is invalid.  The trade is also invalid if the pair rises above 143.50 before hitting our entry.

To recap, we will look to buy the GBP/JPY at 140.55 with our stop placed at 139.90.  Our initial profit targets are 141.57 (38.2% of CD) and 142.43 (61.8% of CD).

Daily Chart - Pattern would complete near the bullish trend line.	30min Chart - Bullish Gartley; buy @ 140.55.

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